Question:
Discuss About The Cloud Computing Many Other New Technologies?
This is the age of massive competition. Due to increased competition, government regulations and many other developments like Globalization, business climate is getting complex. Most of the organizations want not only to reduce their IT spending but also to focus on their core competencies. ERP systems help the organization to streamline and optimize their business operations as a result of which organization can focus more on its core competencies.
Whirlpool, an American Home appliance manufacturer, is selected for the purpose of this assignment. Its revenue is more than 20 billion US dollar and it is having 10 manufacturing centers, 50 research centers and numerous sales offices. It is a household name worldwide however it is using legacy systems, which are not capable of handling the scale of operations. Company is evaluating to migrate their IT systems from traditional systems to modern IT systems to reduce the cost of their operations and become more efficient. There is no dearth of organizations that have suffered heavy losses while implementing ERP systems. There are even incidents of going bankrupt of FoxMeyer drug while implementing ERP systems. These list of failures shows that it is very important to carry out the proper feasibility study before finalizing the ERP product.
Whirlpool has presence in more than 170 countries and sells its product under various brand names like Jenn-Air, Maytag, Amana, Bauknecht to name a few. As its operations are spread worldwide, it has to deal with numerous suppliers and distributors on a daily basis and it is very important that company should have to the date IT systems to carry out its operations effectively.
Whirlpool is using both make to stock and make to order strategy. Some of its standard products with standard specifications are make to stock based on the demand forecasting and customer orders are replenished from the existing inventory while some of its products that are based on the bulk orders for some particular customer with particular specifications are made to order once the order is received. Some of its key business processes are as follows:
Order to cash cycle where it receives orders from distributors and book them. Once orders are booked in the system at sales office, they are transferred to the warehouses where they are picked and stored near the dock. Based on a delivery schedule, order will be dispatched and shipped to the customers. Once the customer receives the order and confirm delivery, invoice will be prepared and sent to them. Once the payment has been received, the sales order is closed (Black, & Kohser, 2017).
Creating and completing discrete and lot based job: Once the work orders are released by the advanced supply and planning system, they are scheduled. Based on the schedule, marketing is issued from the stores for the work orders that are due to complete that day. Once the various operations based on the routings are completed, jobs are completed and on hand inventory is increased (Dumas & Rosa, 2013).
Inventory Counting Process: Whirlpool maintains an inventory of hundreds of raw materials to manufacture its wide range of products. Inventory accuracy is very important for the organization to ensure that the inventory in the warehouses matches with the quantity in the system (Black, & Kohser, 2017). Whirlpool conducts periodic inventory counting process and corrects the errors in the system.
Quality Inspection Process: Whirlpool provides high quality to their customers. To ensure quality, it has various checks in place. Whenever material is received against the purchase order, the quality team inspects it before it is accepted. Also, while manufacturing, quality is checked during the key operations especially before the bottleneck operations to ensure that right material will be processed by the bottleneck operation.
MRP system: This is material planning system in which based on the demand forecasts; system will generate recommendations for requisitions for appropriate items. Once requisitions are generated, they should also be released at the right time so that they will reach only when they are required and not before that as there is not much space in the warehouse.
Sourcing cycle: As there are numerous raw materials required, whirlpool deals with number of suppliers. While some of the items are purchased on a regular basis, some are one time products. For regular items, Whirlpool has dedicated list of approved suppliers with whom it places purchase order as part of blanket agreement. For 1 time purchase, it releases request for quotations and based on the quotations, it organized reverse auction processes among the suppliers. Once the supplier is shortlisted, contract is signed and purchase order is raised. After receiving the material, it pays to the suppliers.
Prototyping/Engineering: As the company focuses on a continuous research and providing the better products to its customers, prototyping is an important function in the company.
Below is the list of requirements based on the business processes:
There are lots of system requirements. Product should be scalable i.e. it is easy to rollout the ERP products for new sites. Also, it should have standard flexibility for all the business processes without having any customization (Wu et al., 2015). Not only this, it should support the structure of maintaining various legal entities so that it is easy to maintain financial information based on the region. It should be secure and user friendly. Also, one of the important things is localization. There are different countries that have their own rules of doing business and have different business processes (Chang, 2016). It is very important that ERP systems should have their localized product for different nations specially China and Brazil where there are quite a number of regulatory actions are needed unlike most of the countries. Also, ERP should have their product on the cloud and the data migration from legacy to cloud systems should also be easy.
Oracle fusion ERP systems: Oracle is one of the top 2 market leaders in the ERP systems. It has various modules like Purchase order, Sales order, Account payables, Bills of materials, Costing, Manufacturing, Advanced planning systems and pretty much fulfill the system and business requirements of the Whirlpool. Also, it is used by the world leaders like 3M, General electric, Philips, Boeing and thus has very impressive credentials. While earlier they have on premise system, they have recently come up with the cloud version of their product, which is getting a very good response from the customers (Mancini & Vaassen, 2013).
SAP Systems: SAP is the market leader in the ERP systems. Like oracle, it also fulfills most of the requirements for Whirlpool and also has numerous modules like supply chain, manufacturing, order management, financials, customer relationship management, Projects and so on. World leaders like Schneider, Volkswagen, have also implemented it. With the advent of cloud computing, it also has recently launched its cloud products with pay per use model billing. However, SAP is quite expensive. Also, SAP is very strong in financial modules as compared to manufacturing modules (Singh, 2013). Due to the nature of the business at Whirlpool, it is looking for vendors that have strong capability in manufacturing and supply chain operations.
MYOB systems: MYOB is the leader in accounting systems in Australia and also launched a product in cloud but they are lacking in supply chain systems. There is no support for perpetual inventory, inventory planning systems and limited support for manufacturing. This product is incomplete and if whirlpool uses this product, the probability that another product is needed is very high which will eventually increase the cost of building integrations between the systems and maintaining the same (Dillard & Yuthas, 2013).
Microsoft dynamics: This product is also very famous but it has limited capability on the forecasting and quality modules. Also, Most of the big organizations like Whirlpool are using SAP or oracle systems. Microsoft ERP is used by the small and medium scale enterprises.
Based on the above analysis, Oracle ERP systems are recommended to Whirlpool as they are quite strong in manufacturing modules and fulfill all the business and systems requirements of the company. They also have a localization products rolled out for china and Brazil (Brown, Xu, & Stevenson, 2015).
Once the ERP vendor is finalized, next step is to shortlist an implementation partner. Each ERP vendor has their list of certified partners. Once Whirlpool has list of certified partners, it can invite proposals from all of them and can consider their costs, timeline and other paratemeters before finalizing an implementation partner. There are organizations like Deloitte, Ernst & Young, IBM, Accenture that have huge experience in implementing oracle applications for big clients like Whirlpool. Selection of right implementation partner is the key to successful implementation. When the FoxMeyer implementation failed, organization blamed its consulting partner Anderson for the failure while Anderson passed the blame on to the SAP and SAP ERP does not have the capability and FoxMeyer has chosen the wrong product for their business processes (Conteh, & Akhtar, 2015).
Data privacy and confidentiality are one of the major issues associated with the cloud computing projects. There is a risk of data leakage as the clouds systems are quite susceptible to the attacks. Also, ERPs systems contain confidential data like details of the customers, suppliers, employees and any leakage can badly impact the reputation of the company. There have been cases that employee who is not a buyer is able to access the Purchase order data and so on. In short, there is no functional security built in the product (Dutta, Peng, & Choudhary, 2013). All data should have authorized access.
There are various rules in different countries about the way data is handled in Cloud. Whirlpool must ensure that cloud vendor should abide by all local rules and will be responsible in case of any penalty (Considine & Parkes, 2012).
As far as the Oracle ERP systems are concerned, they have all the features like access based on the role, workflows based approvals. Most of the risks are coming from the cloud part of it. Whirlpool can consider having a private cloud although it will be costlier but it can be much more secure and there is no instance of data mixing.
Whirlpool should also ensure that Oracle ERP vendor is maintaining the backup copies of the server, which can be used in case of any emergency. Also, Whirlpool should openly talk about points like business continuity plan, disaster recovery plan, and responsibility of abiding local cloud computing laws and so on. Best way to mitigate a risk is to clearly define the owner of the every task and activity and to make the contract as much air tight as possible (Baskerville & Wood-Harper, 2016).
To avoid the risk of malwares, company must ensure that all the anti-viruses and operating systems are updated as soon as the fix is released (Brender, & Markov, 2013). In the recent attack of Wannacry ransomware worldwide, Microsoft has already released a fix before 2 months. NHS hospital, which is major victim of this attack, has not updated its systems and thus become the victim. The best part of the cloud adoption is that updating is not the responsibility of Whirlpool but of the Cloud service provider however Whirlpool has to ensure that Cloud service provider is doing its part correctly on a timely basis.
Conclusion
This report discusses the various steps that will help the Whirlpool to make an informed decision about their investment in IT systems. Whirlpool is the Home appliance manufactures that have its offices worldwide. Currently, it is using legacy systems but with the advent of globalization and massive expansion in last few years, legacy systems are not capable of supporting its scale of operations. And thus Whirlpool is exploring the choice to switch to new IT systems that can streamline and optimize its business operations and helps the organization to save the costs. Keeping this in mind, it started off with discussing various key business processes in the organization and analyzing its business and systems requirements. After that, various ERP products are analyzed and the closest one, which is closely aligned with the Whirlpool business processes, is recommended so that there is no need to build any customizations. Oracle ERP has been found to be more suitable for Whirlpool and it has been recommended and the various steps to arrive at the recommendation are also been discussed.
References
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Chang, J. F. (2016). Business process management systems: strategy and implementation. CRC Press.
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